Vision Group

Vision Insurance Risk Analysis Management (VIRMAM) & Brokers  Pvt. Ltd.



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Frequently Asked Questions
 
1.What is the difference between an Insurance Broker and an Insurance Agent?
 
There is a key and important difference between the two:
An Agent acts on behalf of one insurer only and can only sell what that particular insurer has to offer.
In contrast, an Insurance Broker acts on behalf of its client. An Insurance Broker is not tied to any particular insurer and can arrange the best insurance protection for you, that too at a competitive price, with any insurer.
In fact, a combination of different insurers may be used by the Insurance Broker for addressing the insurance requirements of the same insured based on the expertise and claim settlement history of the various insurers. The same is not the case with the Agent, who will not be able to offer the same range of insurers.
 
2.Can all Insurance Brokers be rated on the same scale?
 
All Brokers licensed by Insurance Regulatory and Development Authority (IRDA), India will have had to demonstrate technical and professional competency and the adoption of ethical procedures. However, there are still important differences even among licensed Insurance Brokers. The following factors would form an important part of selection process of an Insurance Broker:
Experience is important but only if it is across a wide range of risk profiles and includes experience in dealing with a broad portfolio of insurers.
Technical competence is essential. Senior staff should be able to demonstrate the same.
The insurance market tends to place importance on personal relationships because, like any business relationship, there is a significant element of trust involved in the negotiation process. A Broker should be able to demonstrate that a broad range of insurers has confidence in the Broker’s professionalism.
Office work practices are important. Documentation should be timely; filing systems should be orderly; the Insurance Broker should have clear policies about protection of confidentiality and privacy; and access is important, including after-hours. The Insurance Broker should also be able to operate effectively in an internet environment and use a wide range of computer-based technologies.
 
3. In case a client is entitled to Special Discount, which is indicated on the face of the policy, how are Insurance Brokers paid for their services?
In the above scenario, the Insurance Company does not give any brokerage to the Insurance Broker as it has already given discount to the client directly by way of reduction in premium as permitted under regulations.However, for the services rendered to the client, the Insurance Broker may charge some Consultancy Fee. In most of these cases, the benefits derived by the client and the quantum of discount obtained from the Insurance Company far exceed the Consultancy Fee paid by the client to the Insurance Broker.
 
4.Why should a client approach an Insurance Broker?
 
Without a broker, a client has to ultimately rely on his/her own expertise and knowledge of insurance and the insurance market. By contrast, an Insurance Broker has got a plethora of professional knowledge. The Client is entitled to look to the Insurance Broker for expertise and innovation in respect of identifying insurable risks and for placing those risks effectively.

While the size of a client’s business may well give them some buying power, it cannot match the leverage that an Insurance Broker has from placing the business of a group of clients.


Another important point is that the insurance market is dynamic in nature. Coverage, policy wordings and pricing trends are always changing. Newer products are always introduced in the market. The insurance market is ever developing.
Thus one can think of utilizing a broker in much the same way, as one would go to an accountant, a doctor or a lawyer for a specialist advice.


 
5. How does an Insurance Broker get remunerated?
 
The insurance company with whom an Insurance Broker places the business, pays the Insurance Broker a standard percentage of the net premium, commonly known as ‘brokerage’. The overall cost of using the broker as far as any client is concerned, therefore, remains the same had the client insured directly with the insurer. In fact, it may be cheaper to avail services of an Insurance Broker as the client would be spared the likely cost that he/she would incur in trying to analyse various types of insurance.
Even the insurer would be spared most of the costs of acquiring new business as the Insurance Broker undertakes most of the administrative tasks that the insurer would otherwise have had to do.


“Insurance is the subject matter of solicitation”